International rating agency Moody's Investors Service has lowered Vneshprombank's ratings (long-term local currency and foreign currency deposit ratings, senior unsecured debt ratings) from B3 to Caa3, and placed the ratings on review with an uncertain direction. The bank's short-term local and foreign currency deposit ratings were affirmed at Not Prime.
The lender's baseline credit assessment (BCA) and adjusted BCA to ca from b3. The long-term counterparty risk assessment (which defines the likelihood of fulfillment by a financial institution of its contractual obligations in case of default) was reduced to Caa2(cr) from B2(cr) and placed on review with direction uncertain, and the short-term counterparty risk assessment was affirmed at Not Prime(cr).
Vneshprombank's national scale rating was also downgraded, Moody's said on its website.
Vneshprombank's BCA was lowered after the Bank of Russia announced last Friday the introduction of temporary administration at the bank due to a substantial decline in its capital base which caused violation of regulatory requirements, analysts noted. In their opinion, taking this factor into account the bank is unlikely to maintain its operations and fulfill its financial obligations without external support.
Moody's specified that the bank's capital indicators have deteriorated in recent months as the bank had to bump up loan loss provisions after the Bank of Russia's inspection. The bank's capital adequacy ratio fell to 7.8% as of December 1, 2015 (against the regulatory minimum of 10%) from 11.2% a month ago. Thus, the bank violated regulatory capital requirements, although it managed to restore its indicators by an injection into its tier 2 capital using a subordinated loan and financial aid of the shareholders, the rating agency pointed out.
Last Friday Vneshprombank's rating was also cut by Russian rating agency RAEX (Expert RA), for the third time during the week.
